Etihad and Government of Serbia unveil strategic partnership

Etihad Airways, the national airline of the United Arab Emirates(UAE) has unveiled plans to acquire 49 per cent of JatAirways. The Abu Dhabi-based carrier has also been awarded a five year management contract for the Serbian national airline.

•Etihad Airways to acquire 49 per cent of JatAirways•JatAirways to be renamed and rebranded Air Serbia•Etihad Airways awarded five year management contract for new airline•Etihad Airways and Government of Serbia both to inject USD 40 million•Etihad Airways and Government of Serbia to each provide up to USD 60 million further funding•Air Serbia to launch fights to Abu Dhabi from October 2013

These are two of the key components of a
wide-ranging strategic partnership agreement, signed by Etihad Airways and the
Government of Serbia, which includes a fleet of new aircraft, and a new
integrated network of international destinations enabling greater access for
business and leisure travellers to Serbia.

The historic agreement follows
the launch of Etihad Airways flights between Abu Dhabi and Belgrade in June and
will significantly enhance trade and investment relations between the United
Arab Emirates and Serbia as well as boosting the tourism sector in both
countries.

Economic ties between the
two countries, valued at EUR 23.3 million in 2012, three times greater than in
2011, continue to expand with a number of key government agreements signed in
recent months which will see investments in agriculture, defence, technology, and
tourism.

The strategic partnership agreement was announced by James Hogan,
President and Chief Executive Officer of Etihad Airways and Aleksandar Vučić,
Deputy Prime Minister of the Serbian Government, at a media conference in
Belgrade today, Thursday 1 August 2013.

Within the agreement Etihad Airways will make available a USD 40million
loan facility which will be converted into equity on 1 January 2014, subject to
regulatory approval. This will be matched by an equal funding injection by the
Government of Serbia.

Etihad Airways and the Government of Serbia will also each provide further
funding through shareholder loans and other funding mechanisms of up to USD 60
million to meet working capital requirements and support network development
for the newly created Air Serbia.

James Hogan, Etihad Airways’ President and Chief Executive Officer,
said: “We are delighted to welcome Air Serbia to our equity alliance and look
forward to working constructively with them and their stakeholders to build a
sustainable, competitive, and profitable airline.

“In addition to creating scale, our renowned business model provides a
unique common platform to drive synergies and cost savings which will be of
considerable benefit to Air Serbia as the new airline evolves.

“We will have tough decisions to make but the financial investment by
Etihad Airways and the Government of Serbia, together with the positive impact
of our joint management expertise and experience, will help ensure this airline,
with its proud history, now has an even brighter future.”

Aleksandar Vučić, Deputy Prime Minister of the Serbian Government, said:
“Etihad Airways’ reputation, financial strength and stability will be of
significant benefit to Air Serbia and we are delighted to launch this strategic
partnership. Air travellers to and from Serbia will soon benefit from an
incredible range of new products and services.

“The partnership will provide passengers with an extensive route network
and smooth flight connections. It will
also consolidate and enhance both airlines' market competitiveness as the
relationship deepens over the coming months.”

The rebranding and renaming of JatAirways to Air Serbia is a significant
moment in the history of the Serbian carrier which is more than 80 years old.
Tail fins on Air Serbia aircraft will feature the Serbian coat of arms and the
country's state colours on both sides.

The new livery was designed by a team in Serbia and the UAE and provides
a new look and feel for the national airline. The aim was to make a break with
past practice, but not with Serbian heritage and also offer an unmistakeable
national identity.

Among other planned developments will be an enhanced flight network,
codesharing with Etihad Airways and airberlin, adding to Air Serbia’s current
network of 33 cities another 12destinations in Africa, Europe and the Middle
East.

Among the first new destinations to be launched by
Air Serbia will be a four flights a week service between Belgrade and Abu
Dhabi.

Complementing Etihad Airways' current daily flights, the new Air Serbia service will start in October
2013 and will move to daily when the new fleet grows to facilitate an increased
service.

The new A319 aircraft will be in Air Serbia livery,
with a stylish cabin trim and product of a standard never seen before operating
out of Belgrade.

The current JatAirways fleet of 10 Boeing 737-300 aircraft will be
retired from scheduled operations, and in the short term will be replaced by
leased narrow body aircraft. In the longer term, an Air Serbia order will be
made for 10 new narrow body aircraft.

The strategic partnership agreement will also offer unprecedented career
development opportunities for Air Serbia cabin and flight deck crew, who will
have access to Etihad Airways’ world class Training Academy and facilities in
Abu Dhabi.

Air Serbia will become Etihad Airways’ sixth equity partner following
investments in airberlin (29.21 per cent), Air Seychelles (40 per cent), Virgin
Australia (10.5 per cent), Aer Lingus (2.99 per cent) and most recently Jet
Airways (24 per cent – subject to regulatory approval).

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